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FES CYPRUS NEWSLETTER Nr. 38 / AUGUST 2015

Contents

1. Cyprus Problem ...... 2

2. Hydrocarbons ...... 4

Economic Developments ...... 5 Domestic Developments ...... 5 Labour Relations and Trade Unions ...... 6 Foreign Policy ...... 8

4. Turkish Cypriots ...... 8

Economic Developments ...... 8 Domestic Developments ...... 9 Foreign Policy ...... 10

5. FES Cyprus Events ...... 11

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FES CYPRUS NEWSLETTER Nr. 38 / August 2015

1. Cyprus Problem On July 8, President Nicos Anastasiades and Mustafa Akinci attended an event co-organized In July the Turkish Cypriot leader Mustafa by the respective Turkish Cypriot and Greek Akinci’s visited Brussels. Following his meeting Cypriot Chambers of Commerce. Addressing an with Akinci, in a brief statement to the press, audience of business people and diplomats, the the President of the European Parliament (EP), two leaders shared their common vision for a Martin Schulz stated that the EP would do post-settlement Cyprus, stressing that the ‘‘whatever is possible’’ and the ‘‘utmost’’ to financial cost of the status quo was greater than contribute to a successful solution of the Cyprus the short-term cost of implementing a solution. Problem while Akinci reiterated the Turkish Moreover, Anastasiades and Akinci outlined the Cypriots’ will to be ‘‘part and parcel of Europe’’. benefits that reunification would bring to the Evaluating his meeting with the President of the future of Cyprus. EU Commission Jean-Claude Juncker to the Following the commencement of substantive press, Akinci called for relations with all EU negotiations on the core issues of the Cyprus institutions to be further developed in order to Problem in June, Akinci and Anastasiades dis- assist the Turkish Cypriot community to prepare cussed EU matters, Confidence Building for post-solution conditions. “I also emphasized Measures (CBM’s) and the economy during the the need for the solution to be found in Cyprus 5th leaders meeting on July 10. to be recognised as part of EU primary law so that no problems arise at EU courts” Akinci said. On July 15, the President of the European Commission (EC), Jean Claude Juncker, arrived During his visit to Brussels, Akinci met with jour- in Cyprus for a two-day visit. Juncker held bi- nalists from a variety of news agencies including lateral meetings with Anastasiades and Akinci Reuters, the Wall Street Journal and the Econo- and attended a working lunch with both leaders mist at a working breakfast. During his meeting at the Home for Cooperation, which provides a with the journalists, the president said that he shared space for intercommunal cooperation had found the opportunity to emphasize the and dialogue located in the UN buffer zone. In need to find a solution to the Cyprus problem. the presence of Juncker an agreement was Specifically, one that took into consideration reached between the two leaders to end the the interest of both the Turkish Cypriots and long standing Halloumi/Hellim cheese dispute. Greek Cypriots on the island. Explaining that if According to the agreement, the international the negotiations continue at its current speed certification body Bureau Veritas will be tasked the president reiterated that it would be possi- with inspecting the Halloumi/Hellim production ble to reach a solution to the Cyprus problem throughout the island and action will be taken “in a matter of months”. to facilitate Turkish Cypriot producers to export

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

cheese via the south. The Commission will a post-solution Cyprus and the status of its furthermore adopt a proposal to modify the guarantor powers, Hammond stated that Britain Green Line regulation to facilitate trade across is not seeking any special role unless it is asked the line. Additionally, on July 28 the Commis- to perform one. Referring to the British sover- sion proceeded with publishing Cyprus’ applica- eign bases, Hammond stressed that in the con- tion in the official journal of the EU to register text of a settlement Britain was willing to Halloumi/Hellim as a product of Protected surrender a significant proportion of the land Designation of Origin (PDO). bases to allow development.

Moreover, during his visit the EC President an- Turkish President Recep Tayyip Erdogan arrived nounced the reappointment of Pieter Van in the north in order to attend the celebrations Nuffel as his Personal Representative for Cy- of the events marking the July 20 invasion prus, a move signalling a more active EU which according to the Turkish narrative is involvement in the reunification process. Van considered as a ‘‘peace operation’’. Referring to Nuffel will act as a liaison between the UN Good the current peace talks, Erdogan spoke of an Offices Mission and the EC. He will also be opportunity that should not be missed and assisting the parties with technical and legal expressed his hope that the two sides would expertise securing that a solution will be reach a fair result provided that there is political compatible with EU laws and values. Van Nuffel equality. Akinci in the meantime, referred to was first appointed to the post in July 2012. the Turkish invasion as a ‘war’ and not just a Juncker also met with the UN Special Adviser in ‘peace operation’ thus challenging the Turkish Cyprus, Espen Barth Eide and addressed the narrative. In particular Akinci stated: ‘‘there is Greek Cypriot Parliament. no doubt that what we called a peace operation can also be called a war. And the war’s condi- st July 15 marked the 41 anniversary of the coup tions were undoubtedly difficult and challeng- orchestrated by the Greek military junta against ing. After the great suffering the Turkish Cypriot Archbishop Makarios which eventually led to people experienced in the 1950s and 1960s, the the Turkish invasion of July 20, 1974. In a writ- Greek Cypriot community, too, was one of the ten statement Anastasiades called on Cypriots biggest victims of the 1974 tragedy caused by to put aside internal disputes and to move for- the Greek junta’’. According to the Cyprus Mail, ward ‘‘by consensus and with respect for his- this was the first time any Turkish Cypriot tory’’. leader used the word ‘war’ when referring to On July 17, British Foreign Secretary, Phillip the 1974 invasion or acknowledged the effects Hammond, arrived in Cyprus as part of a one it had on the Greek Cypriot population. day visit. In relation to Britain’s potential role in

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

The issues of property and criteria on territory The Cyprus Turkish Businessmen’s Association were discussed during the leaders’ sixth meet- (ISAD) and, the Cyprus Employers and Industri- ing held on July 27. In particular, Akinci and alists Federation (OEB) signed a joint protocol Anastasiades agreed that each individual’s right to establish the ‘Cyprus Trade Forum’ in a bid to to property would be respected and that dis- contribute to the on-going efforts to reach a posed owners and current users will be given comprehensive settlement to the Cyprus prob- different choices including compensation, lem. The Forum aims at supporting and exchange and reinstatement. Moreover, the encouraging business people from both sides of two leaders agreed on the creation of an inde- the divide to work together by organizing semi- pendent property commission comprised of an nars and conferences, and supporting any other equal number of Turkish and Greek Cypriot steps aimed at bringing the two communities members to resolve property claims based on together. mutually agreed criteria. The leaders are expected to meet again on September 1st, A delegation of the Democratic Rally (DISY) paid following the summer break in August. In the a visit to the CTP-BG on July 29. Making a state- meantime, the two negotiators, Ozdil Nami and ment to the press after the meeting, the CTP- Andreas Mavroyiannis, will continue to meet BG leader Talat said that the two largest parties until August 7. on the island had reaffirmed their commitment toward a solution of the Cyprus problem. DISY The Othello Castle in Famagusta has been leader Averof Neofytou, for his part, said that reopened to visitors after the completion of they found the opportunity to discuss thorny restoration works funded by the European and sensitive dimensions of the Cyprus prob- Union and the United Nations. A bi-communal lem. “We shall work hard in cooperation to theatre group staged the Othello play by transform difficulties, threats and concerns into William Shakespeare at the reopening cere- opportunities and hope,” he concluded. mony. Later in the month, Anastasiades and Akinci attended a bi-communal concert at the On July 29, the UN Security Council unani- Othello Castle. The concert was entitled ‘Music mously renewed UNFICYP’s mandate for an- under the Moonlight’ and was performed by a other six months until January 31, 2016 bi-communal group named ‘Kyprogeneia’. The two Greek Cypriot political parties the Citizens 2. Hydrocarbons Alliance and the Greens as well as House Presi- dent, DIKO’s Yiannakis Omirou, criticised Energy was among the core issues discussed Anastasiades for attending the event in the between President Anastasiades and Israeli north. Prime Minister, Benjamin Netanyahu, during Netanyahu’s visit in Cyprus on July 28. The two

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

leaders agreed to expand their cooperation on hospital autonomy. According to finance minis- energy issues, including the use of pipelines and ter Harris Georgiades, growth for 2015 has been electricity grids to connect with European mar- revised upwards to 0.5 % compared with a 0.5% kets. Security, the tripartite cooperation contraction predicted last spring. between Cyprus, Greece and Israel as well as relations between the EU and Israel were also The Shacolas Group of companies concluded a €194 million deal with Attenbury Cyprus Lim- on the agenda. ited, a member of the South-African Attenbury Group, involving the sale of the Shacolas Empo- rium Park and the Mall of Engomi plus adjacent 3. Greek Cypriots land. The company is intending to use around €60 million in order to reduce its outstanding Economic Developments debt of €378 million.

A Troika1 delegation visited Cyprus during July According to the Central Bank of Cyprus depos- 14-24, in order to conduct the seventh evalua- its in the Cypriot banking system in June fell by tion of Cyprus’ adjustment programme. The €398.3 million compared to May. Overall depos- Troika concluded that Cyprus has made overall its account for €45.8 billion. Moreover from good progress but expects further measures on January 2014 until March 2015 commercial the issues related to the issuance of pending banks have restructured non-performing loans title deeds and loan sales in order for the next (NPL’s) worth €4.9 billion. The restructured tranche of €500 million financial assistance to loans correspond to 19.2% of the total of NPL’s be released. Parliament must approve the title in the entire banking system which came to deeds bill, scheduled for discussion before ple- €26.5 billion in March. According to the latest num on September 3, and legislation on the sale figures released by the CBC, NPL’s in the bank- of loans. Addressing the excessive level of non- ing system dropped in May to below 45.85% performing loans in the banking system remains from 46.82% in April or by €817.2 million. the number one priority of Cyprus’ adjustment programme. Additionally, three crucial pending Domestic Developments issues in the current phase are the reform of the public service and future wage increases, Former DIKO leader, Marios Garoyian, attacked privatisations, especially of the telecommunica- current leader of the party, Nicholas Papado- tions authority (CyTA) and the ports, as well as poulos, via an opinion piece published in the local press primarily for his extremist views on 1 The Troika is comprised by the European Commis- the Cyprus Problem. Papadopoulos had previ- sion, the European Central Bank (ECB) and the Inter- ously stated that DIKO’s positions on the eco- national Monetary Fund (IMF).

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

nomic reforms and the handling of the Cyprus figures show a slightly higher unemployment Problem are two separate issues and unrelated rate in men rather than women while youth to each other and referred to the risk of a unemployment stands now at 37.1%. Overall probable breakup of the Republic of Cyprus the most important finding is that long term (RoC) as a result of an unfavourable settlement. unemployment and youth unemployment seem As a result, a two camp rift within the party has to stabilise at very high levels. emerged between a moderate faction led by Garoyian which challenges the traditional hard- 48% of the currently unemployed have been out of the labour force for more than six liners represented by Papadopoulos. months. 83% of the unemployed are Cypriots On July 24, lawyer Giorgos Pamborides was while out of the non-Cypriots, the majority of appointed Health Minister replacing Philippos the unemployed are people from Greece. The Patsalis who resigned earlier in the month. dramatic increase in unemployment levels in Patsalis cited personal reasons for submitting the last years is correlated with significant his resignation. increases of the poverty and poverty risk levels in Cyprus. DEOK, a trade union affiliated with Andreas Pentaras, the Director of the Cyprus the socialist party EDEK, in a statement com- Intelligence Service (KYP) resigned after revela- menting on the Eurostat publication, says that tions that KYP had purchased phone and inter- the figures belie the government’s claims that net connection surveillance technology which the economy is on the path of improvement. apparently had been approved by the Cabinet in 2013. Opposition parties protested against The government came to an agreement with the acquisition of monitoring software that PASYDY with respect to the on-going attempt of could be used for domestic surveillance while the restructuring of the public sector involving a the government denied knowing the software new system of recruitment and promotions, had such capability when it approved its pur- new means of evaluating the performance of chase. Pentaras, who was directly appointed by civil servants and mobility within the civil ser- Anastasiades, is believed to have resigned in vice. Exams are instituted for the promotion to order to protect the President. the higher positions of the civil service, the evaluation system is updated and reformed, Labour Relations and Trade Unions and the transfer of civil servants from one ministry to another becomes easier. The new According to the last Eurostat data, registered system is expected to begin in about one year. unemployment rose in the first term of 2015, An agreement was not reached on the issue of standing now at 17.7% of the labour force as the state payroll, 77.142 people are currently unemployed. The

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

The government proposals on the public sector After a court decision, the government was wages, to be enforced after the end of eventually forced to convert about 300 “tempo- Memorandum at the end of 2016, have been rary” public sector employees, employed for received with serious reservations by the trade many years consecutively into employees of unions as they stipulate that the existing wage indefinite duration. cuts become permanent and that all future OEB has suggested a decrease of the minimum wage raises (including yearly ones, COLA and general raises) should be below the GDP rate wage, provoking the reaction of PEO which increase. This is in line with the employers’ stated that Cyprus had the biggest decrease in salaries in the whole EU and despite all the talk association OEB’s position which has stated that the economy is now going well and that the of competitiveness, there was no improvement state payroll needs to be “restrained”. In a in that field but simply a rise in the profits of th some big companies. Moreover, PEO accused meeting held on 28 of July all the unions have rejected the proposals while the PEO stated the employers of using the crisis as a tool with that beyond the substantive stipulations, these which to undermine the living standards of workers, even the most vulnerable ones on the proposals seriously undermine collective bar- gaining and collective agreements and that it is minimum wage and called upon the govern- certain that this undermining will be extended ment to intensify inspections with respect to 2 to the private sector. “We cannot accept an the violation of minimum wage legislation. automated process” stated the leader of PEO, whereby employment aspects such as wages, 2 wage raises, COLA and benefits are legislated Although the regular working time is the same (38- 39 hours per week) there is a substantial pay gap without consultation with the workers. How- between the public and the private sector in Cyprus ever, there are also signs that subject to as a result of historical, political and industrial rela- modifications which will include consultation tions reasons. With the exception of top managerial positions, where pay in the private sector tends to be processes and union participation in the moni- higher, all the other positions in the public sector are toring body, the unions are ready to accept the paid considerably higher than their equivalent in the logic of tying wages raises to GDP growth rates. private sector. The gap is even higher with respect to older workers whose accumulated years of service in The final agreement if it is reached will be sub- the better working conditions prevailing in the public mitted to the unions’ bodies for approval in and semi-public sectors have allowed them to achieve relatively high salaries. Public and semi-public sector September. workers have suffered significant wage decreases in the last years in the form of total freezes, special The planned strike in the ports in mid-July was contributions, horizontal as well as scaled cuts eventually called off and the unions have amounting to 10 – 15% (and 20 – 25% for all the entered discussions regarding “voluntary exit newcomers as since 2011 new recruits begin at 10% lower wage rates and without the special pension schemes”. benefits of their predecessors). Moreover, the broader

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

In the hotel industry committees overseeing the and the regional dimension of the Middle East implementation of the sectoral collective agree- peace process. ment have started work. Moreover the unions welcome the changed stance of the hoteliers that are now willing to discuss the possibility of 4. Turkish Cypriots “legally guaranteed basic rights enforcement” and hope that they can reach an agreement on that matter in the on-going discussions taking Economic Developments place at tripartite level between the govern- In a written statement, Undersecretary of the ment, the employers and the trade unions. State Planning Organization Odul Muhtaroglu announced the latest balance of payments Foreign Policy statistics of the Turkish Cypriot economy. Muhtaroglu pointed out that at USD 11.7 mil- On July 24, the EU High Representative for For- lion, the current account deficit for 2014 was eign Affairs and Security Policy, Federica the lowest of the last three years. The deficit Mogherini, paid a one day visit to the island. was USD 125.1 million in 2012 and USD 44.7 in Speaking after a meeting with President 2013. The figures announced by the state plan- Anastasiades, Mogherini underlined the crucial ning organization are as follows: role Cyprus is playing for the EU’s foreign policy in the Middle Eastern region. Anastasiades and Exports: USD 122.4 million in 2012, USD 120.7 Mogherini shared their views on the wider million in 2013 and 134 million in 2014. framework of the region, in light of the recently Imports: USD 1,705.3 million in 2012, USD agreed Iranian deal, relations with Egypt, Israel 1,699.4 million in 2013 and 1,784.3 million dol- lars in 2014. public sector was seen as over-staffed and recruitment has effectively stopped in 2011, while a quota Foreign trade deficit: USD 1,582.9 million in has been fixed in the agreement with the Troika in 2012, USD 1,578.7 million in 2013 and USD 2012 stating that there will be one person recruited 1,650.3 million in 2014. for every four retiring. However as a result of the depression and the high unemployment as well as the Net Tourism Revenues: USD 571.9 million in deterioration of the terms of employment in the public sector which acts as a sort of informal compara- 2012, USD 613.4 million in 2013 and USD 679.4 tive framework, wages in the private sector have million in 2014. decreased even further in the last four years. Thus the pay gap between the public and the private sector Net Higher Education Revenues: USD 412.8 has remained and in some cases has even widened in million in 2012, USD 535.6 million in 2013 and the context of the current crisis. Overall it is esti- USD 589.8 million in 2014. mated that the real wages in 2013 dropped around 22% when compared with 2011.

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

Turkish Financial Assistance: USD 219.3 million between CTP-BG and Democratic Party (DP- in 2012, USD 225 million in 2013 and USD 227.1 UG), which was established on 4 September million in 2014. 2013, came to an end. EU and UNDP Financial Assistance: USD 34.5 As CTP-BG’s new chairman and former presi- million in 2012, USD 41.1 million in 2013 and dent Mehmet Ali Talat is not a member of the USD 39 million in 2014. parliament, and therefore cannot serve as the Other figures can be accessed here: prime minister, upon the CTP-BG’s demand, the http://dpo.gov.ct.tr/Odemeler-Dengesi/EN/BP- president appointed CTP-BG Kyrenia deputy 2011-2014_en.pdf Omer Kalyoncu to form the new government. After a round of talks with the delegations of The outgoing Minister of Finance Zeren Mungan political parties represented in the parliament, said that he improved the situation of the treas- the extended party assembly of the CTP-BG ury since taking over two years ago. He decided to form the new coalition government explained that though he had inherited a defi- with the National Unity Party (UBP). The CTP-BG cit, he left a budget with a surplus. “In June has 21 seats while the UBP has 18 seats in the 2013 we inherited a budget with a TL 20 million parliament. The CTP-BG/UBP government is the deficit. A year later, in May 2014, we achieved a first grand coalition in the Turkish Cypriot politi- budget surplus of TL 5 million followed by a TL cal life. “A broad based coalition government 21 million surplus in June 2015,” Mungan said. will benefit the economy and is important in He added that the Ministry of Finance was respect to the Cyprus problem,” the CTP-BG ready for the reunification of the island. leader Talat said. According to the Turkish Cypriot Hoteliers After receiving a vote of confidence (35 yes; 9 Union, the average hotel occupancy rate in June no; 6 absent) from the parliament on July 27, was 53 percent; 25 percent less compared to the CTP-UBP coalition government held its first the same period last year and 15 percent down council of ministers meeting on July 29. The compared to May 2015. cabinet was announced as follows:

Domestic Developments Prime Minister – Omer Kalyoncu (CTP-BG) Minister of Foreign Affairs – Emine Colak (CTP- Following the leadership change at the Republi- BG) can Turkish Party-United Forces (CTP-BG), Prime Minister of Finance – Hasan Basoglu (CTP-BG) Minister Ozkan Yorgancıoglu submitted his Minister of Health– Salih Izbul (CTP-BG) resignation to President Mustafa Akinci on July Minister of Food, Agriculture and Natural 3. As a result, the coalition government Resources – Onder Sennaroglu (CTP-BG)

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

Minister of Interior and Labour–Aziz Gurpinar July 28. Before his appointment to Nicosia, (CTP-BG) Kanbay served as the Turkish Ambassador to Minister of Economy, Trade and Industry – Ljubljana and Baghdad. Sunat Atun (UBP) Minister of Transport–Tahsin Ertugruloglu (UBP) The Chairman of the Board of Directors of the Minister of Education – Kemal Durust (UBP) Cyprus Turkish Electricity Authority Ismet Akim said that work on installing the much awaited Minister of Tourism – Faiz Sucuoglu (UBP) Minister of Public Works and Environment - emission filter at the Teknecik power plant was continuing. He, however, pointed out that it Kutlu Evren (UBP) was highly unlikely this could be completed In the meantime, the Democratic Party (DP), before 2016. Akim added that they were also now the main opposition party with 8 deputies, trying to improve the quality of the fuel used in announced the draft of its ‘New Political Vision,’ the power plant. which is made up of four main headings: ‘the Democracy Package’, ‘the Economy Package’, Foreign Policy ‘the Cyprus Issue’ and “the Relations with Tur- key”. Stating that the project included Turkish Cypriot President Mustafa Akinci important reforms, particularly on taxes, the received the High Representative of the Euro- party leader Denktas said that they would con- pean Union for Foreign Affairs and Security tinue to hold consultation meetings with vari- Policy/Vice-President of the European Commis- ous civil society organisations before they final- sion, Federica Mogherini. In a short statement ize the program. after his meeting with Mogherini the president discussed the latest stage reached on the Derya Kanbay who has been appointed as the Cyprus problem and that Mogherini reaffirmed new Turkish Ambassador to Nicosia presented the EU’s continuing support to the Cyprus 3 his letter of credence to President Akinci on negotiation process.

For the first time in Turkish Cypriot history, a 3 The Turkish Republic of Northern Cyprus (TRNC) is only recognised by the Republic of Turkey. While for woman, Emine Colak, is in charge of the Minis- Turkey and the Turkish Cypriots, Mustafa Akinci try of Foreign Affairs. Born in Nicosia in 1958, serves as President of the TRNC, the international Colak earned a law degree from the University community considers him the communal leader of of London (SOAS) in 1979. Between 1994 and the Turkish Cypriots. As the government of the Republic of Cyprus remains internationally recog- 2002, she was a member of the Nicosia Munici- nised as the government of the whole of the island, the entire island is now considered to be a member a political settlement to the Cyprus problem (see of the European Union. However, the acquis com- Protocol no. 10 of the Accession Treaty). munautaire is suspended in northern Cyprus pending

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

pal Council. She was also the coordinator of a 5. FES Cyprus Events committee which discussed laws during the Annan plan process in 2003-2004. Colak also August served as the chairperson of the Turkish Cypriot

Human Rights Foundation.

Speaking in an interview Colak said that the Thursday 13.-24.08.2015 political leadership on both sides of the divide IKME / FES was showing a strong stance towards reaching a Workshop political settlement on the island. “We are hopeful of achieving a positive result. If not in German-Cypriot Youth Exchange Program 2015 I foresee a settlement in 2016,” Colak said. Stating that she had personally witnessed how Nicosia & Lapta, Cyprus fast the negotiation process was moving for- ward and how much progress had been Not open to the public achieved after taking office, the minister said “I truly see a chance and opportunity for a solu-  tion even though we have all lived with disap- pointment and failed expectations for the past 50 years”. September

A delegation from the Social Democratic Party (TDP) headed by its leader Cemal Ozyigit partici- Monday 28. and Tuesday 29.09.2015 pated at the Council of the Socialist Interna- tional (SI), which was held at the United Nations PRIO / FES Headquarters in New York between 6-7 July Conference and Workshop after an official invitation by Luis Ayala, SI Secre- tary General. Ozyigit said that during the coun- International Basic Practices in Combating cil, they had the opportunity to meet with Human Trafficking representatives of different countries and Nicosia, Chateau Status, UN Buffer Zone, Cyprus added that although there was a consensus on the membership of his party to the SI, it was not Monday: Conference is open to the public ratified due to lack of quorum. The TDP's Tuesday: Workshop is not open to the public membership application to the SI will be included in the agenda of next Council meeting. 

FES CYPRUS NEWSLETTER Nr. 38 / August 2015

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